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“The fact is that long-term structure (processes and outsourcing) is based on the paradigm of stability and predictability. When the paradigm is challenged by digitalization and unpredictability, then the pre-requisite for long-term structure (process and outsourcing) changed. A new paradigm is needed based on agility and flexibility that influence our view on processes and outsourcing.”

A couple of years ago, I had a discussion with a senior business managers regarding IT processes. We were implementing processes for ordering IT services from an outsourcing partner. New tools were to be implemented to increase collaboration and efficiency. It was important for the business managers to understand the new standardized way of cooperating with IT. In the middle of the workshop, the business manager turned his head to us and said:

“Why do we need processes? It is much more flexible with the old way of working. I would much rather just give our IT support a personal phone call”.

This statement puzzled me a great deal as it went against the paradigm of business efficiency and effectiveness through processing work methods. How could a senior business manager not understand the importance of processes and automation?

It is important to understand that the IT organization was characterized by a production (operational excellence) approach to achieve cost efficiency – not unusual in any way. The business case of the outsourcing required mature and efficient processes to achieve the cost reduction targets (primary) and quicker time to market.  But the IT and business landscape is changing through digitalization increasing unpredictability. IT organizations are forces to support business success (customer value and revenue growth in a more and more complex business environment). What does this mean for process re-engineering and outsourcing?

There are five statements (described in numerous research) that dictate the new law of IT business success that needs to be in consideration when evaluating process re-engineering and outsourcing.

  1. Business have no patience for non-relevant information
  2. The business requirements will change constantly (unpredictability)
  3. Business want to be approached in different ways depending on situation
  4. Business want the services they need to be successful (not what IT provides)
  5. Business wants their services immediately without trouble!

How does process re-engineering and outsourcing actually support these statements? Not very well! The fact is that long-term structure is based on the paradigm of stability and predictability. If we know exactly what our customers will need in the next five years – then we can build up long-term structure to optimize the produced business value! When the paradigm is challenged by digitalization and unpredictability, then the pre-requisite for long-term structure (process and outsourcing) challenged. A new paradigm is needed based on agility and flexibility that influence our view on processes and outsourcing.

It would even go to such extent to say that the belief in IT process is harming the value creation of the IT organization. The main reason for this statement is that an over-implementation of process tends to increase control and bureaucratic culture, and artificial intelligence in the organization. Face it; processes are excellent for controlling employees of doing work in a way that managers and consultants believe in. It is possible to measure process efficiency in very creative ways creating high and low performers in the teams. It also undermines the trust of employees being able to do their work as a sort of artificial intelligence is introduced with the processes. This is the smart and efficient way of doing it! The machinery is trusted to a greater extent than the employees running the machine. Does this make employees more or less motivated? Does this make employees more or less innovative? Does this create more or less business value in an unpredictable environment? It is an interesting discussion!

I have seen endless number of IT organizations mapping and developing processes with expensive consultants – with little progress. Is the organization better of having all processes documented in data repositories? The question is what happens if the pre-requisite for IT suddenly changes and processes quickly need to be updated to respond to new business demand? Where to start? How does it support the new laws of business IT success of total flexibility and value creation? How does a turn-around time for a defining the scope of service proposal (RFS) with an outsourcing partner in India of 45 days create business success? Time is critical!

My view is that business demand for flexible and faster services plays a pivotal role in defining the role of IT and the interaction between business and IT. Business and IT need to be integrated in a more efficient way focusing to joint strategies and knowledge. The answer is a true value chain with little bureaucracy and administration (no administrative processes to order IT services). The key is the relationship between IT and business, with dedicated “Account managers” or “Digital officers” to bridge the gap between IT and business. The fact is that complex process can never replace a well functioning relationship based on knowledge, self-governance and adaptively in the digital era. This is due to the fact that digitalization with high unpredictability demands flexible and agile relationship with IT – and cannot rely on complex processes that are very difficult to change.

My recommendations:

  1. Start by defining how IT creates business value in collaboration with business. What key processes are needed to support business success? Select 5-10 process only!
  2. Define what is core in the IT delivery structure that needs to be protected (for example methodology and architecture). Define process and governance to protect this – leave the rest!
  3. Build up network structure of service or account managers with limited bureaucracy that can easily be updated. Measure the value they create and use continuous improvement to develop value creation.
  4. Create great governance and performance management to set principles for how services are to support business based on self-governance (based on expectations).
  5. If you want to discuss this further – give me a call!

Looking back at the process implementation a couple of years ago, I can now view the situation with fresh eyes. The Senior Business Manager actually had a point of demanding total flexibility to support his/her business needs. But the problem was that the business case did not fully consider the business needs in a changing environment but rather consider how IT could become more cost efficient. The question I ask myself today is if the increasing force of digitalization and unpredictability is the beginning of the end of process re-engineering and traditional outsourcing. Time will tell.

– Hans Gillior

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